Company Coverage
Riverstone Holdings (RSTON SP): ASP Normalisation And Shareholder Returns Remain Key Focus
BUY (Maintained)
Current price:
Target price:
Upside:
S$0.86
S$1.10
+27.9%
Analyst
Highlights
- • We hosted Riverstone recently, where management highlighted its industry development and the company’s outlook to our institutional clients.
- Normalisation of ASPs after the Iran war and an above-100% payout ratio should support earnings and shareholder returns.
- Maintain BUY with an unchanged target price of S$1.10, pegged to 25x 2027F
PE. Riverstone currently trades at 19x 2027F PE vs peers’ average of 22x.
Analysis
Key takeaways from SG Small & Mid Cap Corporate Day. We hosted Riverstone Holdings (Riverstone) recently at our SG Small & Mid Cap Corporate Day, where management met with our institutional clients and provided updates on the group's demand outlook, ASP normalisation, raw material cost trends and capital allocation plans. Discussions also covered customer stickiness, competitive dynamics across the cleanroom and healthcare glove segments, and the group's dividend policy. A summary of the key questions raised is presented on the following page.
• ASP hikes in cleanroom gloves and a focus on customisation for healthcare gloves to support earnings recovery. Management expects better ASPs across both product segments, which should underpin earnings growth over the coming quarters. Cleanroom gloves are expected to enjoy stronger pricing power, supported by resilient demand from AI infrastructure, data centres and memory/storage applications, as well as tight industry supply. Meanwhile, healthcare glove ASPs continue to remain competitive due to ample supply of generic gloves. However, we expect Riverstone to continue enjoying healthy margins given its focus on highly customised products.
• Committed to maintaining payout above 100%. Management has reiterated its commitment to maintaining an above-100% dividend payout ratio, supported by its sizeable net cash position, debt-free balance sheet and healthy operating cash flow generation. This provides sufficient financial flexibility to sustain attractive shareholder returns despite near-term earnings and forex volatility, while continuing to fund its operational and expansion requirements.
Highlights
- • We hosted Riverstone recently, where management highlighted its industry development and the company’s outlook to our institutional clients.
- Normalisation of ASPs after the Iran war and an above-100% payout ratio should support earnings and shareholder returns.
- Maintain BUY with an unchanged target price of S$1.10, pegged to 25x 2027F
PE. Riverstone currently trades at 19x 2027F PE vs peers’ average of 22x.
Analysis
Key takeaways from SG Small & Mid Cap Corporate Day. We hosted Riverstone Holdings (Riverstone) recently at our SG Small & Mid Cap Corporate Day, where management met with our institutional clients and provided updates on the group's demand outlook, ASP normalisation, raw material cost trends and capital allocation plans. Discussions also covered customer stickiness, competitive dynamics across the cleanroom and healthcare glove segments, and the group's dividend policy. A summary of the key questions raised is presented on the following page.
• ASP hikes in cleanroom gloves and a focus on customisation for healthcare gloves to support earnings recovery. Management expects better ASPs across both product segments, which should underpin earnings growth over the coming quarters. Cleanroom gloves are expected to enjoy stronger pricing power, supported by resilient demand from AI infrastructure, data centres and memory/storage applications, as well as tight industry supply. Meanwhile, healthcare glove ASPs continue to remain competitive due to ample supply of generic gloves. However, we expect Riverstone to continue enjoying healthy margins given its focus on highly customised products.
• Committed to maintaining payout above 100%. Management has reiterated its commitment to maintaining an above-100% dividend payout ratio, supported by its sizeable net cash position, debt-free balance sheet and healthy operating cash flow generation. This provides sufficient financial flexibility to sustain attractive shareholder returns despite near-term earnings and forex volatility, while continuing to fund its operational and expansion requirements.
BUY (Maintained)
Current price:
Target price:
Upside:
S$0.86
S$1.10
+27.9%
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at the following link: https://research-api.uobkayhian.com/assets/disclaimer/df64a6ea-7980-447c-ae9e-fd19b93257dc, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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